Chris Joye aside, The AFR has been a key conduit of the banking sector’s campaign against the Turnbull Government’s 0.06% levy on big bank liabilities.
Since the policy was announced in the May Budget, The AFR has published reams of articles decrying the levy as either “populist”, “ill-conceived”, “inefficient”, or “incoherent”.
Today’s Chanticleer is no exception:
The federal government’s sham consultation process for the $6 billion bank tax begins and ends this Friday when representatives of the big four banks and Macquarie Group head to Canberra to front a Senate committee.
Chief financial officers and treasurers will have one last chance to send a direct message to Parliament about a tax that fails the two main tests of good policy – efficiency and equity…
One bank told Chanticleer it will remind Parliament that the tax is a gift for foreign banks, which are not covered by the tax…
Another bank plans to question the committee on the exact purpose of the tax. Is it designed to promote competition? Or is it really the fee to be paid for the federal government’s implicit guarantee of bank solvency?..
Another point that will be made forcefully by one of the banks on Friday is in relation to the lack of a sunset clause…
One of the banks plans to use Friday’s session to remind the federal government that the tax has shocked foreign investors who hold bonds issued by the Australian banks…
This rhetoric appears to have intensified in the wake of public opinion polls that show about 70 per cent of Australians back the bank tax. Chanticleer understands the banks have private polling showing the same levels of support for the tax.
This underlines the fact that the bank tax is in the sweet spot of reactionary populism.
From the outset, The AFR’s incessant opposition to the bank levy has not passed scrutiny.
The fact remains that the big banks enjoy an estimated 20bps to 40bps funding advantage because of the government guarantee, according to the RBA, which is effectively a $5 billion annual taxpayer subsidy provided to the banks. The smaller banks, and indeed foreign banks, are not considered to be government guaranteed, which is why the big banks receive a three notch ratings upgrade on their smaller rivals.
Would The AFR seriously prefer that the big banks continue to be guaranteed implicitly and pay nothing for the privilege? Because Australian taxpayers will be on the hook regardless. So the Government might as well make the whole system of guarantees transparent and price them accordingly.
In any event, The AFR’s and the banking lobby’s incessant whining looks like it will fall on deaf ears. Amid the widespread public support, as well as the strong policy rationale of recouping some of the taxpayer subsidies provided to the big banks, Labor and The Greens are set to pass the bank levy legislation through the Senate next week before Parliament rises for the winter break. This will ensure the levy can begin on 1 July, as scheduled.
Hopefully, then, the issue will be put to rest.
